Low-income Philadelphians face another obstacle to home ownership

About Elizabeth Fiedler

WHYY Urban Life Correspondent Elizabeth Fiedler has interviewed politicians; athletes; and Philadelphians from Fishtown, Norris Square, Point Breeze, Overbrook Farms, Pennsport and many other neighborhoods. From the world's first pizza museum to a neighborhood with an influx of families but no school, she searches for the treasures, trends and tensions that make Philadelphia the most interesting city on the planet. She has also covered crime and education in Chester, Pa., and in Camden, N.J.

Pennsylvania is her home state and she's ready for the Phils to win another title.

Improving a city with so much crime and blight is an overwhelming challenge in Philadelphia. So some residents are taking a do-it-yourself approach in the city's Kensington neighborhood and resorting to some creative financing to fight blight one house at a time.

The house on East Westmoreland Street hasn't had an easy life.

"This particular house in January had been set on fire by drug dealers to send a message to the neighbors," said Jamie Moffett, a documentary filmmaker. "I was away at the time and got a phone call saying that the house down the street was on fire."

Moffett, who has a studio on the block, has poured himself into helping the neighborhood improve. Working with community residents on an initiative called "Kensington Renewal," Moffett's trying to help improve the neighborhood. And this house is a big piece of the effort.

He points out the smooth walls, worn but beautiful hardwood floors, and exposed brick; he says he wants to make a point with this house.

"I wanted this to sort of function in a way as a model home," Moffett said. "To kind of show that ... this kind of neighborhood can support more investment and better quality homes that are still at an affordable rate."

As if neighborhoods like this don't face enough challenges, Moffett says he discovered a big obstacle -- small mortgages are hard to get.

A pity and a fact of life

Jack Guttentag knows all about mortgages and this problem.

"I don't think there are any lenders that will make home mortgages of less than $50,000 and some will cut it off at $75,000," he says.

Guttentag, a finance professor emeritus at the Wharton School of the University of Pennsylvania, manages a website that helps educate consumers.

"It costs the same amount to originate a $50,000 loan as to originate a $500,000 loan. It costs the same amount to service the two, but the revenue that's generated is a function of how large the loan is," he says. "So on a $500,000 loan, you're going to get 10 times as much revenue as you'll get on a $50,000 loan.

"So the short answer is, lenders won't write them because there's no money in it for them," Guttentag says.

Which puts places like Kensington, with its abundance of inexpensive homes, in a tough spot.

"It's a pity, but it's a fact of life," he says. "It's a pity in the sense that lower-income people buying less expensive houses are the ones that constitute the demand for small mortgages, yet those mortgages are the ones that are difficult if not impossible to get just because they're too costly to originate and service."

Back in Kensington, Andrea Worrell passes by the renovated house with her 2-month-old son. Worrell, who is 19 year old and studying to be a nurse, says she's seen some improvements in the area recently.

"I don't really see as much violence no more," says the lifelong neighborhood resident.

But in the same breath, Worrell admits, the neighborhood's still not good enough.

Moffett says areas where there are more homeowners often have less crime. And even though it's just one small piece of a much larger puzzle, he hopes the family that moves into this house makes a difference -- adding another anchor of home ownership to the block.

"The asking price will be $84,500. For me, this isn't just a new market real estate opportunity," he said. "I'm really fortunate. I mean. I get to build a house for, hopefully, who will be my new awesome neighbors."

Given the price, getting a loan may not be so much trouble for this home. Just to make sure, Moffett's partnered with a community lending organization to help the home's new owner get a mortgage. But for nearby homes that have not been renovated top to bottom, he says getting a loan is still a big hurdle.

"The average rental in this neighborhood is $600. The mortgage for this house will be less than what most people pay for rent," he said. "It ends up being a social justice issue ... because if a family can save that money for a family, that money can go towards food, it can go towards a stronger more stable family."

This weekend, Moffett will find out if it was all worth it when the house on East Westmoreland goes on display at an open house.

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